Many institutional investors pursue investment strategies that employ conventional instruments such as derivatives, equity swaps, or other volatility-based investments to obtain enhanced financial returns. However, such investment strategies often do not balance the goal of achieving enhanced returns through use of volatility-based vehicles with the objectives of (1) maintaining a relatively high level of liquidity for the investments, and (2) minimizing credit risks associated with the investments.
What are needed, therefore, are improved investment strategies that are capable of addressing the deficiencies of conventional investment strategies utilizing volatility-based investments.